Who has been worst affected so far?

The International Monetary Fund says an escalation of the tit-for-tat tariffs could shave 0.5% off global growth by 2020.

There are signs that the trade dispute is already affecting the Chinese and US economies.

Morgan Stanley has said a full-blown escalation of the trade dispute could knock 0.81 percentage points off global gross domestic product. This scenario would involve the US slapping 25% tariffs on all goods from both China and the EU, and similar measures imposed in response.

Among companies, the car industry seems to have been the most affected so far. Major carmakers recently warned that changes to trade policies were hurting performance.

Ford and General Motors have lowered profit forecasts for 2018, citing higher steel and aluminium prices caused by new US tariffs.

Smaller Asian countries further down the supply chain could also suffer. According to the Economist, 30% of the value of the goods China exports to America originates from third-party countries.

Ultimately, China may not have as much firepower as the US to retaliate, given the US buys much more from China than it sells to them. This could mean it would find alternative ways to fight back such as making life difficult for American companies in China by increasing red-tape.